Aurora Global Income Trust (ASX: AIB) is a trust, which aims to deliver absolute positive returns regardless of the market conditions, in both the rising and the falling market. The fund manager uses a number of different strategies that allow the fund to have a little correlation with the global equities market indices. The core strategy is to take advantage of companies that are expected to increase in value around their announcement of quarterly, half-yearly and yearly earnings. The manager follows a rigorous investment selection process to select companies on qualitative and fundamental research.
On 15th April 2019, the company announced the Net Asset Value (NAV) per unit of the trust, including franking credits is estimated to be $0.15 as at 12th April 2019. The trust has a significant holding in HHY Funds (ASX: HHY), and the investment is valued at HHY’s closing price on ASX on 12th April 2019, which represents a discount to HHY’s Net Tangible Asset (NTA) position. The trust has an opinion that HHY’s underlying value is its NTA.
The trust has also made investments in Molopo Energy Limited (ASX: MPO). The total valuation of MPO represents 21% of the value of the assets of the Trust. The shares of MPO had been suspended from trading on the Australian Securities Exchange (ASX) on 27th July 2017, and since then, remain suspended as of 15th April 2019.
On 10th August 2018, Aurora released information stating that it will not disseminate Aurora Fortitude Absolute Return Fund’s takeover bid free from its defeating conditions, which led to the withdrawal of the fund’s takeover bid. After this withdrawal, Aurora reassessed its valuation of Molopo Energy to $0.036 per share from the early valuation of $0.135 per share, which was the take-over price. This valuation has again been reassessed after the year-end audit process and stands at $0.026 per share.
On 31st January 2019, Aurora has further reassessed the carrying value of its investment in Molopo Energy after its release of quarterly cash flow statement for the quarter ended 31st December 2018. The assessment resulted in writing off 2.6 cents to 1.9 cents per share from the valuation. Aurora may again revise the carrying value of its Molopo Energy investment as Molopo Energy releases more information on the Drawbridge shareholding and the Canadian litigation.
The current and the fair value of investment in Molopo Energy is based on estimates and judgements by the management of Aurora, which is based on all the publicly released information about Molopo Energy as at 31st December 2018.
On 4th April 2019, the company announced an on-market buy-back of a maximum of 761,067 fully paid ordinary shares for the purpose of capital management. The buy-back is yet to be commenced and will end on the first anniversary thereafter.
The company has a market capitalisation of A$799.12k. On the technical front, the stock surged by 28.57% and closed the market at A$0.135 (on 15 April 2019), which is also the day’s high. In the last six months, the stock has delivered a negative return of 53.3%, while the YTD return stands at negative 30%.
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